Electric vehicle fire risk may force insurers to lift premiums

Electric vehicle

It was only a matter of time before insurers took a close look at the fire risk posed by electric vehicles, especially when they are parked in and near homes, in garages, in carparks under apartment blocks, in vehicle service facilities and in commercial car parks.

It is not beyond the realms of possibility that insurance premiums will rise to cover the increased risk to buildings where an EV fire may break out.

It should be stated that EVs are no more likely to spontaneously combust than internal combustion-engine (ICE) vehicles. Rather, the problem is the intensity at which an EV burns.

Where an ICE vehicle burns at 1500ºC, an electrical vehicle burns at 5000ºC and can take hours to extinguish.

Insurance companies are certainly looking at whether premiums should be increased to cover the higher level of risk where EVs are garaged, and the increased risk of total loss of a building due to the ferocity of an EV fire.

It is quite possible that the structural integrity of an entire building could be compromised following an EV fire in an underground carpark.

Another concern for insurers is the risk posed to commercial car parks, and auto repair and service facilities where EVs are housed.

The premium for an EV is based on a number of factors:

  • EVs, particularly high-end brands such as Tesla, Polestar, Mercedes-Benz, Porsche and others, have a high initial purchase price
  • the technology and parts in an EV are more expensive to produce and replace (in particular, motor parts and the battery)
  • the repair of an EV necessitates importing parts into Australia
  • there are, at this time, few electric vehicle service centres across Australia with the expertise and equipment to repair EVs, so damaged vehicles may need to be transported far from where the damage is incurred to a site where it can be repaired
  • specialty tradespeople with the skills to repair EVs are in short supply
  • repairing damaged EVs is time and labour intensive, requiring special equipment and specialised disposal and recycling methods.

Insurers admit that it is too early to predict the potential fire hazard posed by lithium-ion batteries and how that might affect premiums for property owners.

Meanwhile, repairers are also looking at their options. New industry-approved repair guidelines for EVs are being implemented, including new levels of training and repair skills, and more stringent safety rules.

EVs a risk to life?

A report in CBS News declared that lithium-ion battery fires had been responsible for at least 20 deaths and more than 300 injuries in New York City and San Francisco since 2019.

These numbers are misleading, however. The US National Fire Incident Reporting System (NFIRS) – as used by fire departments – does not distinguish EV fires from ICE fires.

EV fires in the US are comparatively unusual, because EVs currently only comprise between 1 and 2 per cent of all vehicles, although that number is increasing quickly.

With increasing concerns about fires and the potential for thermal runaway fires for EVs, including cars, e-bikes and e-scooters, a US Democrat senator has introduced a proposal to set national consumer standards for rechargeable lithium-ion batteries.

Chilling statistics

There is an urgent need for training for businesses, people and locations working with, or planning to work with, lithium-ion batteries and EVs.

One local organisation, EV FireSafe, is offering training for emergency responders (including police, firefighters, roadside assistance organisations, road rescuers, paramedics, tow operators, road and tunnel operators and emergency managers), focusing on the challenges faced when dealing with thermal runaway incidents.

Although a private organisation, EV FireSafe has received funding from the Australian Department of Defence to further investigate EV high-voltage battery fires and emergency response, particularly where the EV is connected to energised charging.

Studies to date indicate that lithium-ion battery fires are more prevalent and pose a higher risk to life and property, but electric powered cars, trucks and buses are less of a risk than other e-mobility vehicles such as e-scooters and e-bikes because they use higher quality batteries and are more usually charged in open spaces. By contrast, e-bikes and e-scooters tend to use lower quality lithium-ion batteries, are exposed to high wear and tear and more likely to be charged inside homes.

The United Firefighters Union Australia has called for greater regulation and public education about the use of EVs and battery energy storage systems.

“New EV sales within Australia increased by 65 per cent in 2022,” said a spokesperson, “and with the rapidly increasing take-up of these and BESSs (battery energy storage systems), the issues are growing exponentially.

“There is no greater likelihood of an EV fire than a combustion-engine car fire, but when they happen the risks are huge and the consequences are enormous.”

EV FireSafe has released some statistics relating to EV fires globally (1 January to 30 June 2023). It recorded 44 passenger EV battery fires, resulting in 15 injuries and four fatalities. For electric buses and trucks, five battery fires were recorded, with no injuries or fatalities reported. However, for light electric vehicles, there were more than 500 battery fires, 138 injuries and 36 fatalities.

This article was originally published on seniordriveraus.com.au and republished with permission.

Will your next car be an EV? Have you been following the news about EV fires? Share your thoughts in the comments section below.

Also read: How over-50s can get the best value car insurance

Written by Paul Murrell

One Comment

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  1. There is a good question?

    When your insurer asks where the car is “garaged?” And you say under the house, in a locked garage or somewhere safe because you think that will keep the premiums down – YOU ARE WRONG!

    Youi and all these others DO NOT WANT you to park “under your house, in a locked garage or somewhere safe – as it could be a multi-million $ claim – for burning down a high rise, or multi-million dollar home.

    “I park it out on the street and have an extension lead out through the window!”

    “Great – your premium is only $1500 a year!”

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